and conditions. At a pre-determined time, the officer receives a cash payment equal to the difference between the original price and the appreciated price. For example, let’s assume the officer receives 1,000 phantom shares with a beginning price of $50. At the end of three years, the bank calculates the phantom stock price to be $75, and then pays the officer any positive difference; in this example, the bank would pay the participant $25,000. The Bottom Line The article highlights the importance of bankers reviewing current programs and, where necessary, implementing new executive benefit plans that address the evolving needs of today’s multi-generational workforce and are strategically focused. Based on NFP’s experience and research, we know that comprehensive benefits packages are key to providing the financial incentives needed to attract, retain and reward top talent and put both employers and employees on the path to success. If your bank has previously implemented some type of non-qualified plan or retention plan, perhaps it’s time to re-evaluate the design and the related benefit agreements. Items to periodically assess include (1) compliance with IRC §409A, (2) revisions to benefit amounts given participant promotions and salary changes, and (3) accounting and tax considerations, including Change in Control (IRC §280G) provisions. Based on our experience, several Colorado banks have been successful in attracting and retaining key talent with these types of executive benefit plans. Whether your bank has executive benefit plans in place or not, the planning process for any new or revised compensation plans, to be implemented effective Jan. 1, should start now. Ken Derks is a consultant with NFP Executive Benefits, which is also a Premier Partner with the ABA. He is a registered representative with Kestra Investment Services, Member FINRA/SIPC. NFP and Kestra Investment Services are not affiliated. To learn more, contact Ken Derks at ken.derks@nfp.com. Insurance services provided through NFP Executive Benefits LLC. (NFP EB), a subsidiary of NFP Corp. (NFP). Doing business in California as NFP Executive Benefits & Insurance Agency LLC. (License #OH86767). Securities offered through Kestra Investment Services LLC, member FINRA/SIPC. Kestra Investment Services LLC is not affiliated with NFP or NFP EB. Investor disclosures are available at https://bit.ly/KF-Disclosures. 1. Source: 2025 NFP U.S. Executive Compensation and Benefits Trend Report 2. Source: 2024 Pearl Meyer Compensation Survey Report, survey of banks was conducted by Pearl Meyer with data collected as of April 1, 2024 3. Source: 2024 Community Banks Compensation and Benefits Survey, survey of banks was conducted by ABA with data collected as of March 31, 2024 Colorado Banker 8
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